(Fortune Magazine) -- Just when backdating options seemed like the state-of-the-art method for executives to line their pockets, along comes a crafty yet legal tactic that involves
stashing stock grants in the furthest corners of the footnotes: Call them backdoor options.

As backdating options continues to ensnare corporate officers, a Boston-based company called American Tower has faced questions from the SEC and U.S. Attorney's office over its use of
backdating. But backdating isn't the only eyebrow-raising element of their compensation strategies.

How Backdoor Options Work

Deep in American Tower's proxy lurks a sneaky scheme.

1. American Tower sets up a subsidiary.

2. Executives are allowed to purchase stock in the subsidiary.

3. Execs acquire stock through cash and a loan; they also get options to buy more shares.

4. The executives can force AT to buy them out within a certain period of time.

5. AT's purchases net employees millions in profits.

American Tower (Charts) has a market cap of $15 billion
and owns the infrastructure, such as towers and rooftop structures, that wireless companies lease. Last May the company announced that a special committee of independent directors was
reviewing its option-granting practices; in September, American Tower said it will have to restate more than three years of financial results. But a close look at its filings also
reveals that top executives have made tens of millions from stock in subsidiary companies - information you won't see in the compensation table of its proxy statement.

hidden numbers

In the standard table in American Tower's proxy - the one that lists the salaries, bonuses and other compensation for the five highest-paid employees - you see that an executive named
Michael Gearon, the company's vice chairman and the president of its international business, has earned $2 million in cash over the past three years and has gotten 665,000 options.

In 1998, Gearon sold Gearon Communications to American Tower and joined the company. He still lives in Atlanta, where his firm was based, and is a part-owner of the Atlanta Hawks.
General counsel William Hess earned $1.8 million in cash and got 370,000 options over the past three years.

But in the tables detailing options exercises there's a footnote that says that during 2004, American Tower's Brazil operation, called ATC South America, granted "certain employees,"
including Gearon and Hess, options to purchase common stock of ATC South America at an exercise price of $1,349 per share. Those separate options were exercised in October 2005.

The footnote says that the "value realized" by Gearon and Hess was approximately $11.5 million and $2.7 million, respectively, and refers you to another section of the proxy called
"Related Party Transactions." This section of proxies became notorious in the wake of Enron, because it's where CFO Andy Fastow's infamous partnerships were actually disclosed to
investors.

In this section of American Tower's proxy, you learn that in March 2004 Gearon paid $1.2 million for a 1.6 percent stake in ATC South America; in October 2005, American Tower expects
to pay him $3.7 million for that stake. Plus, Gearon got options - worth some $11.5 million a year and a half later - to acquire 6.7 percent of ATC South America. (Hess's options
allowed him to acquire 1.6 percent of ATC South America.)

And you learn about another entity, ATC Mexico. Back in 2004, Gearon and Hess exercised their "previously disclosed" rights to require American Tower to buy their stakes in that
entity. Afterward Gearon collected $36.2 million, much of it in American Tower stock that has since more than tripled.

If you check American Tower's 2005 10-K, you'll learn - in footnote 11 - that Gearon used just $1.7 million of cash plus a $6.7 million loan from American Tower to buy his stake in
ATC Mexico.

So Gearon picked up cash and stock worth well over $30 million (a figure that doesn't take into account the stock's recent uptick) in these side deals - payments that aren't reflected
in the compensation table in the proxy.

Hess and the others got some $20 million. Why would Gearon get all this additional money for running the international business when his job description is to run the international
business? Why isn't this compensation disclosed in the compensation tables?

"It's a matter of judgment on the part of the company and its advisors," says Kenneth Laverriere, a partner at New York law firm Shearman & Sterling. "It's a close call."

James Taiclet, American Tower's CEO, says these agreements were put in place in 2001 when the international business didn't exist, and were done to provide Gearon and his team with
the "incentive to take the risk" of building the business. He points out that Brazil and Mexico now account for 13 percent of the company's revenues and says "shareholders have
benefited tremendously." He also says the agreements are "very thoroughly disclosed in the appropriate places."

Not that investors seem to care about any of this. American Tower's stock has doubled since 2005. That has helped Gearon, who's sold stock worth $40 million over that time period,
grow his fortune even more.